Developing Asian economies will grow 6.1 percent in 2014, the Asian Development Bank (ADB) said in a report Wednesday, lower than the 6.2 percent it forecast in September.
In its supplement to Asian Development Outlook Update 2014, the ADB also trimmed the 2015 projection for the region to 6.2 percent from 6.4 percent previously. "The growth outlook for developing Asia remains steady, even though momentum slowed in the second half of 2014, but the declining oil prices represent a golden opportunity for many beneficial reforms," the Manila-based lender said.
Developing Asia, which covers 45 developing economies of Central Asia, East Asia, South Asia, Southeast Asia and the Pacific, grew 6.1 percent last year, according to the ADB. "While growth in the first three quarters of this year were somewhat softer than we had expected," ADB Chief Economist Shangjin Wei said. "Declining oil prices may mean an upside surprise in 2015 as most economies are oil importers," said Wei. "Falling global oil prices present a golden opportunity for importers like Indonesia and India to reform their costly fuel subsidy programs," Wei emphasized.
"On the other hand, oil exporters can seize the opportunity to develop their manufacturing sectors as low commodity prices tend to make their real exchange rates more competitive." The ADB revised down China's growth forecast to 7.4 percent in 2014 from 7.5 percent estimate in September, and to 7.2 percent from 7.4 percent for 2015. "The growth moderation in China is seen extending into the fourth quarter due to a continued real estate market correction and its spillover to the related sectors like construction," it said.
The bank maintained 5.5 percent growth outlook for India in fiscal 2014. "By eliminating diesel fuel subsidies, the Indian government has demonstrated its willingness to tackle contentious reforms, but it must extend its efforts to reach the forecast 6.3 percent growth in fiscal 2015," the ADB noted. Growth projections for Southeast Asia has also been lowered slightly to 4.4 percent for 2014 from the previous estimate of 4.6 percent, and 5.1 percent in 2015 instead of 5.3 percent.
The ADB is a multilateral development finance institution dedicated to reducing poverty in Asia and the Pacific. Established in 1966, it has now owned by 67 members, mostly from the region, as well as the US, the UK and Germany.